590 THE IMPENDING REVOLUTION. 



water their stock, under various pretenses, by issuing, say, 

 30,000 more shares, which they distribute among the stock- 

 holders in proportion to the amount each holds, and free of 

 further charges. This they would call a stock dividend of 

 fifty per cent. 



The road now, which originally cost $6,000,000, is 

 represented by a capital stock of $9,000,000, upon which 

 the public are taxed to pay dividends to stockholders. 

 The dividend, however, which was formerly 30 per cent, 

 has, by this fictitious increase of capital stock, been 

 reduced to 20 per cent, without any reduction of the real 

 profits on the original investment 



Under various pretexts the above capital may be 

 increased until the nominal dividend will show up in the 

 books of the company and their reports to be but 8 or 10 

 per cent. , while it is 30 per cent, on the original invest- 

 ment. 



The history of the companies which have been con- 

 solidated into what was known as the Pittsburg, Fort Wayne 

 & Chicago railroad, furnishes a very fair illustration. 

 Here the process of watering was early commenced as a 

 simple and desperate expedient for raising money, at an 

 enormous discount, for the purpose of completing an 

 enterprise of doubtful success. The stock subscriptions, 

 which were paid in cash into the treasury of the company 

 were very small amounting, perhaps, in all, to less than 

 23 per cent, on the final cost of building and equipping the 

 road. It is said, that of the $18,663,876, representing the 

 cost of the road, the stockholders had contributed less 

 than $4,000,000. 



In 1870 the stock of the company stood at $11,500,000 

 and its indebtedness at $13,600,000 more, being in all some 

 $1,150,000, above the cost of the road as it stood upon the 

 books of the company. 



In June, of this year, a lease was effected of the entire 



